Insight March 2025

DECEMBER 2024

Transportation T ransportation Market Market Overview Overview

TRUCKLOAD TRUCKL LOAD

INTERMODAL

LTL

PARCEL

INTERNATIONAL

©2025 MODE Global, LLC MODE Public

TRUCKLOAD Truckload Market Ma arket Update Update The Outbound Tender Rejections Index (OTRI) remained compressed through February, closing at 5.26%.

This sustained softness continues to favor shippers, with little indication of upward pressure before International Roadcheck week in mid-May.

Spot market conditions followed a familiar trend, with National Van Spot Linehaul RPM increasing by $0.07 per mile year-over-year, marking a 4% gain. However, falling diesel prices weighed on overall costs, leading to a 1.4% year-over-year decline in National Dry Van All-In RPM.

March 2025 MODE Insight

Source: sonar.surf

TRUCKLOAD UPDATE Looking ahead, FTR Intelligence maintains its outlook for a stable 2025. National linehaul rates are projected to see sub-5% year-overyear growth, but continued declines in fuel surcharges may offset these gains, keeping all-in RPM relatively flat or slightly negative.

Source: ftrintel.com

National Spot Rates Flatbed rates and volumes climb

$2.11

$2.15

DEC

JAN

$2.04

$2.00

FEB

MAR

$ $2.44 $ $2.39 $2.44 FEB JAN DEC

$2.47

MAR EST.

$2.48

$2.54

DEC

JAN

$2.35

FEB

$2.28

MAR EST.

EST.

DRY VAN Source: DAT.com/trendlines

March 2025 MODE Insight

FLATBED

REEFER

INTERMODAL Intermodal Market M Update U As Q1 is drawing to a close, Intermodal providers have continued to push rate increases over 2024 levels.

Intermodal volume has dropped five percent on a year-over-year basis, according to the Association of American Railroads, to start 2025. Equipment capacity and railroad gate reservations have not been an issue during Q1.

March 2025 MODE Insight

LTL LTL Industry News Ne ews Here are links to some top stories in the industry for you to check out:

P44 and My Mycarrier ycarrier Legal Battle Ongoing

AD Pyle Py yle Exp Expanding panding into Ohio

Yellow Legal Battle Continues

LTL Market Market Update As we approach the end of Q1 2025, the Less-Than-Truckload (LTL) industry is experiencing a dynamic landscape characterized by cautious optimism, evolving demand patterns and strategic corporate maneuvers.

LTL experts are hopeful but realistic about 2025, anticipating modest growth in freight volumes and demand for services. While some publicly traded LTL carriers have cited softness in tonnage and shipments, industry forecasts still suggest that shipper freight volumes will stabilize in 2025, with traditional seasonal patterns reemerging. While industrial shipment recovery is primarily expected to buoy freight demand, especially as 2025 progresses, the sustained growth of e-commerce will continue to drive demand for LTL services. As online shopping becomes increasingly prevalent, LTL carriers are adapting their operations and pricing methodologies, accordingly.

While challenges such as cost pressures, economic uncertainties and regulatory changes persist, innovations such as automated freight management systems, ecofriendly trucking initiatives and freight optimization technology are being adopted to improve route optimization, sustainability and transparency in freight transportation.

March 2025 MODE Insight

LTL UPDATE UNITED STATES ISM MANUFACTURING PMI

Source: Federal Reserve & Trading Economics

Fuel: The U.S. national average cost per gallon for on highway diesel in the month of February 2025 came in at $3.675, which is $.041 or 1.1% higher than January’s average of $3.634. The U.S. national average in February of 2024 was $4.044, which is $.369 or 9.1% more than February 2025. We start the second week of March 2025 off at $3.582 per gallon for the U.S. national average.

March 2025 MODE Insight

PARCEL U.S. Small Parcel Market Update: February–March February–March 2025 2 FedEx FedEx has been navigating a competitive landscape marked by operational challenges and strategic realignments: Operational Integration: FedEx is working to merge its Express and Ground networks to eliminate redundancies. This integration aims to streamline operations but has uncovered technology and productivity challenges that the company is actively addressing.

Market Position: Despite these efforts, FedEx's on-time performance during the 2024 peak season declined to 91.8%, down from 98.3% in 2023, indicating areas needing improvement.

UPS UPS has undertaken significant strategic shifts to enhance profitability and operational control: Reduction in Amazon Deliveries: UPS plans to reduce its volume of Amazon packages by 50% by June 2026. This decision allows UPS to focus on more profitable shipments and regain control over its delivery network.

Financial Outlook: Following the announcement to scale back Amazon deliveries, UPS's shares experienced a significant drop, reflecting investor concerns over potential revenue impacts. However, the company emphasizes that this move is part of a broader strategy to prioritize profitability over volume.

USPS The United States Postal Service is undergoing transformations amid financial challenges and operational changes: Privatization Discussions: There are ongoing debates about privatizing USPS due to substantial financial losses, including a $9.5 billion deficit in the recent fiscal year. Such a move could significantly impact e-commerce deliveries, especially in rural areas.

International Shipping Adjustments: USPS briefly suspended incoming packages from China and Hong Kong in response to new tariffs and the elimination of customs exceptions for low-value packages. This suspension was quickly reversed, and USPS is now collaborating with Customs and Border Protection to implement a tariff collection system.

March 2025 MODE Insight

PARCEL Amazon Amazon continues to expand its logistics capabilities, influencing traditional carriers: Logistics Expansion: Amazon's in-house logistics network has grown substantially, now managing a significant portion of its deliveries. This expansion challenges traditional carriers like UPS and FedEx, prompting them to reassess their strategies and customer bases.

Market Position: Amazon Logistics has surpassed UPS in U.S. parcel volume, reflecting its growing dominance in the delivery sector. This shift underscores Amazon's commitment to controlling its supply chain and reducing reliance on external carriers.

Market Trends Several overarching trends are shaping the small parcel market: E-commerce Growth: The continuous rise of e-commerce drives demand for efficient parcel delivery services, prompting carriers to innovate and expand their networks.

Technological Advancements: Investments in automation, artificial intelligence and alternative delivery methods (such as drones) are becoming essential for carriers aiming to enhance efficiency and meet customer expectations.

Regulatory Changes: New trade policies and tariff regulations are impacting international shipping dynamics, requiring carriers to adapt their operations accordingly.

In conclusion, the U.S. small parcel market is in a state of flux, with major players like FedEx, UPS, USPS and Amazon making strategic decisions to navigate challenges and capitalize on emerging opportunities. Staying informed about these developments is crucial for stakeholders to adapt and thrive.

March 2025 MODE Insight

INTERNATIONAL K Trends Key Trend ds d Volume: Slow recovery but demand likely not strong enough to offset rate decline.

Rates: Rates slipping again moving to March – BCO negotiations pushing downward.

Capacity: Fewer blank sailings in late February and early March as carriers establish market positions.

Trump Tariff Update: 30-day pause announced, pushing potential tariffs to April 2.

Volume/Demand Vol lume/D Demand D Volume recovery from Asia in Q1 remains slow, which is not surprising given the recent turmoil created by the shifting carrier alliances, announcements/implementation of new tariffs and rising inventory/sales ratios. This is all coming right after a strong January when import volumes from Asia increased significantly over the previous year.

U.S. imports from Asia were up nearly 13% in January year over year and that is also compared to a 17.6% growth over the January 2023 totals; however, February volumes lost some of that ground, with a decline of about 1112% compared to January but still a 4.7% increase compared to February 2024 .

February import volume was the second highest total for the month over the last five years, trailing February 2022 by just 73,341 TEUs; however, this decline is mostly in line with the average seasonal decline seen over the last three to four years.

Despite this expected decline, a shorter month for sailings and a Chinese Lunar New Year that extended through to February 12, overall U.S. container volumes in February were decent.

Moving into March, the actual impact of February’s 10% tariff implementation on volumes is difficult to gauge but it is possible we could see some additional declines in China orders through March.

March 2025 MODE Insight

INTERNATIONAL Ratess Moving into March, carrier attempts to raise rates on March 1 predictably failed, and FAK rates moved downward into the $2000s per FEU (West Coast) and the $3000s (East Coast) for the first time since December 2023.

Asia-U.S. West Coast rates fell by around 18% according to the Freightos Baltic Index at the end of February, moving into March. Rates for the Asia-U.S. East Coast trade also dropped about 21%.

The ocean carriers had filed general rate increases (GRIs) effective March 1 and March 15 with the intention of pushing spot rates up leading into annual contract negotiations. But most analysts say there is significant skepticism whether those increases will stick.It is being reported that some carriers are already undercutting current spot rates with special “bullet” rates below $2,000 to the West Coast.

With BCO annual contract negotiations continuing in March, carriers will surely try to force FAK rates up by midMarch. Early reports of the BCO negotiations indicate that some large retailers are pushing back on carrier proposals looking for healthy increases over their current contract rates; however, any of those increases may be temporary as it seems clear that current demand levels would not support sustained increases.

It seems more likely that some level of rate erosion will occur after the first half of March, and that rates could potentially dip below the $2000/FEU level to U.S. West Coast and the $3000/FEU mark to U.S. East Coast.

March 2025 MODE Insight

INTERNATIONAL UPDATE Capacity/Supply Ca apacity///Supply As new alliance structures get solidified, blank sailings moving into March appear to be the lowest in the last year with only an estimated 13 sailings scheduled to be canceled over the next four weeks.

This should indicate that capacity in the U.S. import trade will be available.

These new alliances – the Gemini Cooperation (Maersk + Hapag Lloyd), Premier Alliance (HMM, ONE, Yang Ming) and MSC (+ ZIM on the AsiaUSEC) – are now beginning to establish their new or revised networks with more consistent schedules; however, with this increased capacity there is also a market risk that as demand continues to lag, rates could continue to erode.

Source: M+R Spedag Group

Despite a Houthi-declared ceasefire and a hope that Red Sea shipping issues would start to improve, there is still significant uncertainty and risks which have led to carriers resisting resuming normal transits and schedules. No new attacks have been reported, but the region's overall instability continues to be a concern for most ocean carriers.

March 2025 MODE Insight

INTERNATIONAL UPDATE Operational Ope rational News Ne ews Trump Tariff Update: On March 6, it was announced that President Trump will be delaying the previously announced 25% tariffs on goods from Canada and Mexico until April 2.

President Trump had earlier only mentioned an exemption for Mexico, but the recent amendment that he signed to his order for 25% levies on imports from both countries apparently covers Canada as well.

For at least the next 30 days, U.S. importers won’t be required to pay tariffs on imports from Canada and Mexico that adhere to the U.S.-Mexico-Canada Agreement.

The White House also announced that it would grant a one-month delay for tariffs on auto manufacturers whose cars comply with the USMCA. The White House did not specify if the 30-day exemption included both finished vehicles and auto parts imported from Canada and Mexico. Commerce Secretary Howard Lutnick said a one-month exemption for more than just the finished vehicles is likely.

The 10% duty on imports of Canadian electricity and oil remain in place, as they are not part of the USMCA. The White House Press team said the goal of this pause (after discussions with the Big 3 automakers) is to give automakers that comply with the United States-Mexico-Canada Agreement more time to shift their supply chains to the U.S.

March 2025 MODE Insight

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